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White Collar Defense, Investigations, and Regulatory Advice Blog: WCIRA News Clips: SEC Staff Issues Statement on Preparing for Impending LIBOR Transition

July 2019

Charlotte Litigation Member Neil Bloomfield’s blog post titled, “WCIRA News Clips: SEC Staff Issues Statement on Preparing for Impending LIBOR Transition” was published on July 22.

The article

On July 12, 2019, the U.S. Securities and Exchange Commission (SEC) joined the call to prepare for the transition away from LIBOR.  The staff of several Divisions of the SEC (the Divisions of Corporation Finance (DCF), Investment Management (DIM), and Trading and Markets (DTM)) and its Office of the Chief Accountant (OCA) issued a public statement regarding the impending transition away from using LIBOR as a benchmark and reference rate for commercial and financial contracts. Warning of the potential risks associated with the transition and the failure to prepare in advance, the SEC staff stated that it is monitoring the transition-related efforts of market participants and provided detailed recommendations regarding the courses of action market participants should consider taking. The U.S working group dedicated to recommending an alternative rate for USD LIBOR has offered the Secured Overnight Financing Rate or SOFR as its preferred alternative. The SEC staff statement noted that the SEC “does not endorse the use of any particular reference rate” and SEC staff is monitoring whether the use of multiple replacement rates for USD LIBOR instead of one could hinder the effectiveness of all alternative rates. The United Kingdom, the European Union, Japan and Switzerland also have working groups dedicated to recommending alternatives to LIBOR for their currencies. The SEC staff recommended that market participants stay abreast of developments in these and other jurisdictions, as well as potential changes to reference rates other than LIBOR, given that “work being performed globally to address reference rate transition risk is ongoing and evolving.”

Please click here to read the full blog post.